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Comment by xupybd | Hacker News Reader

I don't want to discourage your son but this might set him up for life. Learning not to invest all your savings in high risk investments is a good life lesson. An invaluable one if you ask me. Learning how to hold on to my money took me way too long.

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> not to invest all your savings in high risk investments

FTX's failure was due to fraud. Not "high risk investments." They literally didn't have the assets they claimed to have. The same investments held at other centralized exchanges or via self-custody (e.g. Bitcoin) would have lead to a different outcome.

A. Get caught up in fraudulent exchange bankruptcy: 75% drawdown

B. Buy BTC on a legit exchange: 80% drawdown

Crypto is very high risk no matter what you do.

BTC is up 32% since the day before the price dropping as a result of the FTX collapse.

BTC is up 77% since the bottom of the collapse.

Crypto's value mostly comes from speculation and money laundering. It's not a safe investment. Currency is not a safe investment.

Right? I could have this all wrong, but it seems half of crypto is "banks are a scam! Screw the FIDC! I'm smart, I got this" and then... Well as the saying goes, "fuck around and find out". I'd take established markets over the wild west any day of the week

Sending a lot of money to some unregulated Internet "exchange" that was literally started a few years ago is a high risk investment (as there's a big risk that the operators will be fraudsters and/or incompetent).

Crypto is rife with fraud, which is why it's a high risk investment.

He'll just burn out and never invest at all like many people did after dotcom bubble.

> just burn out and never invest at all like many people did after dotcom bubble

Or be frugal and thoughtful as folks did after the Great Depression.

Much of the Great Depression generation interpreted that as "only invest in bonds and CDs" and missed out on even larger gains. The stock market did very well the whole 20th century for every retirement generation, if they held lifelong.

This historical sequence of stock investors underperforming wildly in the early 1930s, followed by bond investors underperforming wildly in the 1940s-60s boom, is why the 60% stock/40% bond portfolio became the standard advice for cautious savers.

and then end up like my grandma, living her entire life eating spiceless boiled chicken, arguing with clerks over which coupons go together to make things free, and having a garage full of jars labeled with things like “bits of rubber”. Extreme frugality is not exactly a good life.

That looks like consequence of extreme poverty and can probably only be fixed with psychotherapy.

Investing in nothing but guaranteed bonds (GICs. Not sure what they’re called in the states) isn’t the worst thing. Yes, generally better off with index funds over the long term. But if the idea is that they become not just risk averse but risk allergic, it’s still a perfectly fine way to live.

Tbills are paying 4.8 right now which is not too shabby.

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